Officials fear lure of pension

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NAUGATUCK — The Naugatuck Fire Department hired a young firefighter in August named Nate Peragallo who scored among the highest of 540 applicants on a variety of tests and interviews.

Naugatuck paid for Peragallo to go through the fire academy, and he started as a full-time firefighter on Dec. 5. A week ago Sunday, however, was Peragallo’s last day in Naugatuck. He left to become a firefighter in New Haven. The largest reason for the transition, he told officials, was because New Haven offered a better retirement plan with a defined pension. New hires in Naugatuck no longer have such a plan.

“He is a young guy who has four young kids, and he was looking out for his family,” Fire Chief Ken Hanks said. “I don’t blame him. It would have been nice to have him, but ultimately you’ve got to decide what is right for your life.”

Hanks and other local officials are worried that the borough will lose more young firefighters and police officers to other municipalities that still offer defined benefit pension plans for new hires. Hanks said there are two other young firefighters, in a department of 31, who are on the short list to be hired in other communities. Their reasons for looking elsewhere are also because of the retirement plan.

Over the past five years, the borough has shifted all new municipal employees out of defined benefit pension plans. Instead, they will get defined contribution pension plans, similar to a 401(K) in the private sector, in which both the employee and the employer contribute to the employee’s retirement.

The shift has been largely celebrated by locals who agree with Mayor Robert Mezzo that the borough simply cannot afford the expensive pensions any longer. The move is expected to save the borough several millions of dollars over the years. Naugatuck is one of the first municipalities in Connecticut to make this shift for all new hires. Most municipalities are working toward the same retirement plan.

Hanks said he expects that, in time, all cities and towns in Connecticut will offer defined contribution pension plans rather than defined benefit pensions. However, he is worried about what will happen to Naugatuck’s ability to attract and retain quality employees over the next five to 10 years.

Thus far, it has not been a major issue in Naugatuck. While some employees are leaving — two young Naugatuck police officers left for other departments that offered better retirement plans — both the police and fire departments in Naugatuck have hundreds of qualified applicants on waiting lists. Still, those who Naugatuck hires are usually those who scored highest on tests, interviewed well and had the best recommendations. If those people leave, the borough could be forced to hire weaker candidates.

Hanks, who trains firefighters throughout the state, said that department poaching is a major concern in several municipalities. He noted that Willimantic, Windham County, has had a huge problem with retention since waiving the defined benefit pension plan for new hires. Waterbury has also had issues for years with police and firefighters leaving for higher paying jobs in other municipalities. And Plymouth is currently working on how to combat a similar struggle.

A large concern for these municipalities is how much they spend to train new hires — each new hire costs tens of thousands of dollars to put through training academies while being paid by the municipality.

Proposed legislation at the state Capitol last year would have forced municipalities who poached officers and firefighters from the cities and towns that trained them recently to pay a prorated amount for the training to that municipality. That was unanimously approved in the House and Senate, but Gov. Dannel Malloy vetoed the bill.

Another concern police officers and firefighters have is that if there is frequent turnover, the employees will not get to know the community well, which is a real problem for community policing efforts.

Naugatuck Deputy Mayor Tamath Rossi said there are minimum manpower clauses in the police and firefighter contracts that state if the departments are down a person, they must fill that position with overtime. So when someone leaves, the overtime costs go up.

“Until such time that we address this in contract negotiations, we continue to run the risk of our departments being poached by other departments that have pensions,” she said. “We need some sort of mandate that says they have to stay in place for some sort of time.”

Mezzo, who is currently negotiating new contracts with police and firefighters, said he’s not sure that is feasible.

“You can put language in there but whether or not it would be upheld is another story,” he said. “You’re essentially talking about putting a restrictive covenant in a collective bargaining agreement. For one, I don’t think the collective bargaining unit would agree to it, and two, it’s questionable whether or not we can do that.”

He said there has been talk that younger employees would think of making the change but that the problem has not been overwhelming at this point.

“We anticipated that until other communities caught up to where Naugatuck was in the defined contribution pension plan, there would be some opportunity for newer officers (and firefighters) of the borough to seek employment in communities that have defined benefit pensions still on the books, and that’s just the price that you have to pay to make the switch,” he said. “But I think the benefits far outweigh the challenges.”